230 years of Knowledge.Values. Change.

Dr.-Ing Jochen F. Kirchhoff, Chairman of the Advisory Board and of the Shareholder Circle KIRCHHOFF Group, interviewed by Andreas Heine, Head of Corporate Communication & Marketing, about the successful management of a familyowned company that has been in existence for 230 years and is now a global player.

Andreas Heine: What does operating a family-owned company mean to you?

Dr Jochen F. Kirchhoff: For me, it is the most appealing job that I can imagine: solving issues and setting objectives independently and under your own responsibility with the family for the sustainable and successful management of the Company. It is a passion and a pleasure to be able to work with the people in the Company as well as for the local community.

Andreas Heine: What are the principles and values that have remained constant throughout all the necessary changes over the decades and continue to apply in the future?

Dr Jochen F. Kirchhoff: A company is not a private affair, but a binding social responsibility. It should not be based on the short-term pursuit of success, but on long-term strategies and objectives. The company’s interests are of prime importance. The personal interests of the partners must take second place. Objectives and values should be aligned with Kant’s imperative “conform your actions to universal law” and to the Christian rules “love your neighbour as yourself” or “respect for others is as important as respect for yourself.” The social orientation of the corporate management and executives should be visible and tangible internally as well as externally, as should the corporate leadership values, which shape the strategy and culture of the family-owned company. It is essential to create and embody trust within the company.

Andreas Heine: What have been the most important events in the development of the KIRCHHOFF Group over past decades?

Dr Jochen F. Kirchhoff: I would like to highlight two points. Firstly, the “diversification” policy, and secondly the “internationalisation” we initiated in 1994. Let me outline the key steps regarding the first point, “diversification”: From its inception in 1785, the Company produced sewing needles. In addition to the production of needles, Friedrich Kirchhoff constructed the first press shop for the vehicle industry in 1894. As of 1950 the production of needles was discontinued step by step and replaced by the manufacture of hand tools, primarily screwdrivers at first. From 1955 to 1982, we also produced electrical appliances, storage heaters, as well as the first microwave ovens. At the beginning of the 1980s, we acquired the supplier Kutsch in Attendorn/Germany and thereby also started with the production of passenger car parts. Today this represents our largest business unit. Furthermore, my sons have established two completely new business units since the 1990s, namely KIRCHHOFF Ecotec, which produces refuse collection trucks and road sweepers, and then KIRCHHOFF Mobility. This business unit converts passenger cars and estate cars for people with limited mobility at 12 locations in 3 countries. The basic idea and strategic objective behind “diversification” is to offset cyclical fluctuations and market changes. By expanding the production of finished products for final customers, we also want to avoid an excess of supplier activities in the Company as a whole.

Andreas Heine: What were the key success factors?

Dr Jochen F. Kirchhoff: Not retaining product ranges for too long that are declining as a result of market changes, taking on new challenges in good time, constantly working on innovations, and investing in modernisation. And, most of all, not being afraid to venture into new markets.

Andreas Heine: Some family-owned companies find it rather difficult to take the step towards internationalisation. In the past years, the KIRCHHOFF Group has been very successful in this respect. What recommendation would you give to other family-owned companies?

Dr Jochen F. Kirchhoff: As it is frequently necessary to deal with cultures and customs that we are unfamiliar with, it is often a good idea to first improve your own knowledge of foreign languages. However, it is most important to put confidence in local people as well as to train and qualify them, if necessary. Even if, or precisely because, as German entrepreneurs, we are regarded highly abroad, we should absolutely avoid coming across as German know-it-alls! In our locations worldwide, we employ only local management and specialist personnel wherever possible. This has worked very well over the last 20 years.

Andreas Heine: What role do the locations in Germany play?

Dr Jochen F. Kirchhoff: They represent our roots and our history, which we are proud of. It is also where our know-how and experience was developed. We want to pass this on to our foreign locations, but at the same time constantly develop further improvements for new products and processes, while always remaining receptive to suggestions and good ideas from our employees around the world.

Andreas Heine: What provisions are the partners from the Kirchhoff family making for the Company to remain successful and family-run in the future?

Dr Jochen F. Kirchhoff: We have 12 grandchildren, of whom 4 have already obtained a graduate degree and 3 are studying or about to study. For five years already, we have been holding “Next Generation Days” at our locations in Germany and abroad, in order to familiarise the grandchildren with the way our Group works. This will enable them to freely decide in their own time whether they wish to qualify in due course for a job in the Company by means of appropriate studies and internships or through relevant work in different companies. However, we also regularly observe our pool of managers that are not related to the family as to whether they are suited for a top management position.

Andreas Heine: When it comes to the sustainability of family-owned companies, the greatest problem is often the family itself. How can you make sure that the family acts in harmony for the good of the Company?

Dr Jochen F. Kirchhoff: We have a proven cooperation in the Shareholder Circle for more than 20 years, i.e. between the father and his three sons. From the outset, we developed a “culture of debate” so that only the matter in question is discussed and settled in the event of any differences in opinion. We want to continue to ensure that the principle of unanimity applies to all key decisions—as has been the case so far. Moreover, we have had a Supervisory Board for almost ten years, which consists exclusively of internationally experienced family entrepreneurs and can be called upon whenever necessary. Lastly, the Shareholder Circle, in cooperation with the Supervisory Board, plays a key role in final decisions.

Andreas Heine: Where do you see the KIRCHHOFF Group in the future and what are the greatest challenges?

Dr Jochen F. Kirchhoff: We enjoy good conditions for growth and economic success in all business units if, depending on the competitive environment, we ensure that we are one of the top five companies in the global market and one of the top three in Europe. In the purely domestic business units, we strive to be market and technology leaders in Germany. We will achieve these objectives if we continue to respond to market changes on a timely basis and remain at the forefront of technology through innovations and corresponding investments. An equally decisive factor is to make sure that our employees are proficient, qualified, and motivated. We must ensure a non-authoritarian style of management and delegate responsibility according to qualifications with the aim of having “many entrepreneurs in the Company”. And, of course, we must continue to guarantee competent management of the Shareholder Circle and Supervisory Board for the final decisions.

Andreas Heine: Dr Kirchhoff, many thanks for the interview.

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